Air India has tied up with the National Buildings Construction Corporation for monetising its land parcels.
The national carrier had made a three-year plan to monetise assets worth Rs 5,000 crore by March 2016 and funds raised would be used to retire debt. However the airline was unable to meet its Rs 1,200 crore target for FY 2014. The airline now plans to raise Rs 5,000 crore over ten years.
On Thursday the airline signed a “non binding” “non exclusive” memorandum of understanding with NBCC and both the companies will jointly evaluate land parcels for purpose of monetisation.
Air India and NBCC have worked out three land development models and will share sale proceeds from development of the land or NBCC will construct on behalf of Air India and will get a fair return on construction cost.
The airline said the partnership will help it realise full potential of surplus land.
The airline’s chairman Rohit Nandan said, “Air India had 106 properties in the country out of which some were on lease basis and many were lying idle .Therefore, this agreement to develop and redevelop some Air India properties is an attempt to monetize to the tune of Rs 5000 crore rupees over a period of 10 years.”
“We were expecting to meet a large portion of the targeted revenues last fiscal from sale of land on Baba Kharak Singh Marg in New Delhi but we did not to get a clearance from the Ministry of Urban Development. This land parcel could be developed through a joint venture with NBCC,” said an airline official.
As per estimates the four-acre plot on Baba Kharak Singh Marg would have fetched the airline around Rs 800 crore. Air India is also in discussions with City and Industrial Development Corporation (CIDCO), Maharashtra for development of a Rs 1100 crore plot in Nerul, Mumbai. If both the projects move ahead, the airline may be able make Rs 1900 crore in FY15 in line with its original target,” the official added.